ISM Manufacturing Report: It Hangs On
The Institute for Supply Management’s October reading for the 12% or so of the economy involved in manufacturing came in at 50.9%, which is barely in expansion mode.
The ISM report’s bottom line:
“It does appear that the impact of the slow down in the financial, housing and transportation segments has spilled over into manufacturing with the exception being continued strength in new export orders.”
Though the Bush economy has tended to produce many more upside than downside surprises, a look at the components in the ISM index does seem to indicate a real deceleration that could very well continue in the coming months and move the index into contraction mode for the first time since January.
Looking at the index’s full history, it’s worth noting that the economy’s current run of 51 out of 53 months of manufacturing expansion is the best in over 40 years. That’s better than the best years of the 1990s, which never had a consecutive expansion streak longer than 22 months, and the 1980s, when the longest consecutive expansion streak was 33.
During the years that I was selling production equipment to manufacturing firms, I found the ISM numbers consistently resembled my real-world experience. I would encourage people to take this continued optimism seriously.
Comment by triticale — November 2, 2007 @ 9:48 am